The determinants and effects of health expenditure in developed countries

Previous studies of international differences in health spending have been restricted to the use of relatively small samples of cross-sectional data. Our objective here is to re-examine the results of previous work using a sample of 560 pooled time-series and cross-section observations. Results confirm the importance of GDP as a determinant of health spending, with an estimated income elasticity at or around unity, but also suggest that OECD countries should not be regarded as a single, homogeneous group. The importance of some non-income variables is also confirmed, although the direct effect of these factors appears to be small.